Oil and Gas

Iraq’s move to rush oil bidding could deter some firms

Iraq is opening more of its untapped oil and gas resources to foreign developers, hoping to boost revenues after its costly war with ISIS, but analysts say the rushed bidding process – now timed to precede national elections – could draw a lukewarm response.

Last month, Oil Minister Jabar Ali al-Luaibi unexpectedly moved the date to receive bids from late June to April, meaning the bidding would be held before May 12 national elections. Some believe Al-Luaibi, who is campaigning for a seat in parliament, moved up the date for political reasons.

Al-Luaibi hopes to represent the oil-rich southern province of Basra as a member of the Victory Alliance, which is led by Prime Minister Haider al-Abadi, who is running for re-election.

“Personal and partisan interests are taking priority over national interests,” said Ruba Husari, managing director of the consulting firm Iraq Insight. “The objective of the exercise is aimed doubtlessly at portraying the ministry – and the minister – as aggressive in developing the nation’s resources ahead of the (elections).”

The Associated Press placed multiple calls to al-Luaibi’s spokesman, who did not pick up. An aide to the spokesman said al-Luaibi’s office was too busy with the election campaign to comment on the allegations.

In one of his campaign videos, al-Luaibi tries to reassure a group of weary Iraqis who are worried about their future.

“Past years have wreaked havoc on everything,” a man in traditional Arab clothing says in the video, referring to the devastation caused by war. “Iraq’s wealth is your responsibility,” says a woman dressed in a conservative abaya – a loose black cloak that covers the body from shoulders to feet.

Protect wealth

“I’m confident that with your determination I can protect the wealth of the generations,” al-Luaibi says at the end of the video.

Thursday’s auction will be the fifth since Iraq opened its vast oil and gas reserves to international energy companies in 2009 for the first time in decades.

In previous bidding rounds, officials spent months hosting conferences, road shows and discussions with companies before issuing final contracts. Last month, the minister changed the date to April 15, but when companies asked for more time it was extended to Wednesday, and then to Thursday.

Ian Thom, principal analyst at energy consultancy Wood Mackenzie, said the tighter deadline could work against Iraq.

“Companies may be more cautious if they have not fully evaluated the bid terms,” he said. “This may result in bids being less competitive as companies seek a greater margin of safety.”

Fourteen companies are qualified to bid for exploration and development rights for 11 underdeveloped blocks.

Seven are located near the border with Iran, and three others are located near the Kuwaiti border, while the 11th is in the Persian Gulf, in Iraqi territorial waters.

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